Asset and Financial Position of the Bayer Group

Financial management of the Bayer Group

The financial management of the Bayer Group is conducted centrally. Capital is a global resource, generally procured centrally and distributed within the Bayer Group. The foremost objectives of our financial management are to help bring about a sustained increase in corporate value and to ensure the Group’s liquidity and creditworthiness. This involves optimizing the capital structure and effectively managing risks. The management of currency, interest-rate, commodity-price and default risks helps to reduce the volatility of our earnings.

The contracted rating agencies assess Bayer as follows:

These investment grade ratings from all three agencies reflect the company’s solid solvency profile and ensure access to a broad investor base for financing purposes. We have the ambition to reduce our financial debt considerably in the medium term, to increase profit and cash flow, and to improve our current investment grade ratings toward the “A” category.

As a matter of principle, we pursue a prudent debt management strategy to ensure flexibility, drawing on a balanced financing portfolio. This is fundamentally based on bonds in various currencies, syndicated credit facilities, bilateral loan agreements and a global commercial paper program.

We use financial derivatives to hedge against risks arising from business operations or financial transactions but do not employ contracts in the absence of an underlying transaction. It is our policy to diminish default risks by selecting trading partners with a high credit standing. We closely monitor the execution of all transactions, which are conducted in accordance with Group-wide policies.

Liquidity and capital expenditures of the Bayer Group

Net cash provided by operating activities

Net operating cash flow amounted to €5,930 million in 2025 (2024: €7,368 million). Payments to resolve legal proceedings, which primarily related to the PCB and glyphosate litigations, resulted in a net outflow of €1,175 million (2024: €461 million). That total comprised payments resulting from settlement agreements as well as court judgments.

Net cash used in investing activities

Net cash used in investing activities in 2025 amounted to €1,270 million (2024: net cash of €164 million was provided by investing activities). Net cash inflows from current financial assets totaled €696 million (2024: €2,558 million) and primarily arose from the sale of investments in money market funds. Cash outflows for property, plant and equipment and intangible assets amounted to €2,487 million (2024: €2,778 million). Cash inflows from the sale of property, plant and equipment and other assets amounted to €415 million (2024: €295 million) and mainly resulted from the sale of product rights (€146 million) for Testoviron™, Progynova™ and Cyclo-Progynova™ in Europe/Middle East/Africa, and for Ilomedin™/Ilomedine™, as well as from the divestment of production facilities and office buildings at various sites. Net cash inflows from noncurrent financial assets totaled €144 million (2024: €18 million) and were largely attributable to the sale of shares in Capstan Therapeutics, Inc., United States. Cash outflows for acquisitions, less acquired cash, amounted to €196 million (2024: €184 million) and primarily related to the acquisition of Natsana GmbH, Germany, in the first quarter of 2025.

Net cash used in financing activities

There was a net cash outflow of €3,884 million for financing activities (2024: €7,178 million). This figure included net debt repayments of €2,045 million (2024: €5,018 million). Net interest payments decreased to €1,698 million (2024: €1,972 million). The Bayer Group paid out €127 million in dividends (2024: €131 million).

Free cash flow

Free cash flow (total), which is the total operating cash flow less capital expenditures plus interest and dividends received less interest paid, came in at €2,084 million in 2025 (2024: €3,107 million).

Capital expenditures

Crop Science continuously invests in a variety of projects within its global production network for crop protection products and seeds, as well as in research, development and digital transformation. The largest capital expenditure projects in 2025 included the expansion of research and development facilities at the site in Monheim, Germany (around €91 million). Crop Science also invested in the expansion of fungicide production in Dormagen, Germany (around €32 million). In addition, approximately €20 million in capital expenditures were invested to consolidate the Creve Coeur campus and transition operational activities to the Chesterfield campus in St. Louis. The division also continued to invest in the sourcing of an important raw material used in the production of glyphosate at the site in Soda Springs, United States, in 2025, albeit at a temporarily reduced level (around €7 million). Alongside these projects, the development of digital solutions for our customers was a key investment in 2025 and will remain so in the coming years.

The Pharmaceuticals Division’s most significant investments in property, plant and equipment in 2025 were directed toward cell and gene therapy research and production facilities in the United States, Spain, Germany, the United Kingdom and Canada, amounting to approximately €37 million. Additional substantial expenditures included modernization initiatives within the production network of the product supply organization at the sites in Turku, Finland, as well as Leverkusen and Weimar, Germany, totaling around €30 million. In addition, approximately €30 million was invested in constructing a new solids production facility in Leverkusen, Germany. Capital expenditures for intangible assets amounted to approximately €364 million and mainly pertained to cooperation agreements and licensing activities.

At about €29 million, the Consumer Health Division’s most significant capital expenditure project in 2025 concerned the relocation of existing production facilities to a new site in Qidong, China. Further significant capital spending related to the plant expansion at the Lerma site in Mexico, to facilitate the production of over-the-counter (OTC) nasal sprays and oral liquid products (€22 million). Consumer Health also invested some €15 million in the good manufacturing practice (GMP) upgrade program across its global production sites.

Liquid assets and net financial debt

The Bayer Group’s net financial debt decreased by €2.8 billion to €29.8 billion in 2025, mainly due to cash inflows from operating activities and positive currency effects.

Financial debt included six subordinated hybrid bonds with a total volume of €4.5 billion, 50% of which is treated as equity by three contracted rating agencies. As such, the hybrid bonds have a positive impact on the Group’s rating-specific debt indicators.

In 2025, Bayer AG issued additional bonds on the Chinese capital market. One issuance had a volume of CNY 2 billion (€264 million), a maturity of three years and a coupon of 2.4%. In addition, two bonds with a volume of CNY 1 billion (€119 million) each, as well as maturities of three and five years and coupons of 2.0% and 2.2%, respectively, were issued. Furthermore, Bayer AG issued a floating rate note in the amount of €400 million with a maturity of two years. The floating rate was set at three-month Euribor plus 57 basis points. In addition, Bayer AG issued two bonds on the Swiss capital market. The bonds amounting to CHF 140 million (€149 million) and CHF 125 million (€133 million) had maturities of five and nine years and fixed coupons of 1.1% and 1.7%, respectively.

In 2025, Bayer AG repaid €83 million in hybrid bonds maturing in 2079 (callable on February 12, 2025).

In addition, bonds with volumes of US$3.1 billion (€2.7 billion) and €1.2 billion were redeemed at maturity in 2025.

The other financial liabilities as of December 31, 2025, included €938 million in commercial paper.

Asset and capital structure of the Bayer Group

Between December 31, 2024, and December 31, 2025, total assets decreased by €6.3 billion to €104.5 billion.

• Noncurrent assets fell by €4.8 billion to €71.6 billion during the year, primarily due to foreign currency effects impacting goodwill, intangible assets and property, plant and equipment.

• Total current assets declined by €1.5 billion to €32.9 billion, also mainly due to foreign currency effects. Furthermore, there was a €0.7 billion decline in money market funds, which are recognized under “Other financial assets.”

• Equity decreased by €6.0 billion to €26.1 billion during the year. For information on the acquisition and sale of own shares, please see Note [22] “Equity” of the Bayer AG Financial Statements as of December 31, 2025. The main negative factors behind the change in equity included the negative income after income taxes (–€3.6 billion), the currency translation of equity items (–€2.9 billion), and the dividend payment (–€0.1 billion), while positive factors included changes – recognized outside profit or loss – arising from the remeasurement of the net defined benefit liability (+€0.6 billion). The equity ratio fell to 24.9% (December 31, 2024: 28.9%).

• Liabilities declined by €0.3 billion to €78.5 billion. This was mainly attributable to the decrease in financial liabilities (–€3.3 billion, comprising –€4.0 billion attributable to the redemption of bonds, +€1.1 billion to the issuance of new bonds, +€1.0 billion to the issuance of commercial paper, +€0.7 billion to the increase in liabilities to banks, and –€2.3 billion to foreign currency effects). Provisions for pensions and other post-employment benefits declined by €1.2 billion, largely due to the increase in the discount rate for pension obligations in Germany. Miscellaneous provisions increased by €4.6 billion overall (mainly for litigations). Furthermore, an amount of €1.0 billion for settlement payments in connection with litigations was reclassified from provisions for litigations to other liabilities.

• The Bayer Group utilizes a supply chain financing program (also known as reverse factoring) that enables suppliers to choose to have individual invoices paid prior to their due date. As part of this program, the supplier concludes a financing agreement with a bank or platform operator without Bayer’s involvement and, upon request, is paid the invoice amount by the bank in advance less an interest component. Bayer generally pays the invoice amount to the bank when due; the payment deadlines lie within the usual scope for the industry. Bayer has assessed this program based on various criteria and concluded that the associated liabilities retain the character of trade accounts payable. The related payments to the bank are therefore classified as a cash outflow from operating activities.